Abstract ABSTRACT: The impact of accounting earnings data on bond price behavior is examined for 85 bond issues over the period 1968-1972. Essentially, the study's results indicate that for convertible bonds, certain inferences drawn from stock market research may be extrapolated to this segment of the bond market. That is, accounting data appear to have information content for this market. The study's results concerning nonconvertible bonds indicate that accounting earnings data is incorporated in prices of nonconvertibles, but in a more diffused fashion.

Abstract Reviews the book "The External Audit," vol. 1, "Concepts and Techniques," vol. 2, "Organization and Procedures," by R.J. Anderson.

Abstract Reviews the book "Current Cost Accounting: The Index Number Problem," by K.V. Peasnell and L.C.L. Skerratt.

This paper provides necessary and sufficient conditions for it to be optimal to base decisions on estimates of the parameters that characterize a decision problem (e.g., profit maximization with an estimated price elasticity of demand). We show that the separation of parameter estimation from decision making generally yields lower utility than an integrated approach which takes account of estimation uncertainty. We evaluate the decision in the parameter estimation method and show that the resulting utility loss can be substantial. MANY ACTUAL DECISIONS are based on statistical estimates of parameters that help to characterize the decision environment. For example, a firm maximizing the expected utility of profit might find that its input and output decisions depend on unknown parameters of its demand function. Econometric estimates of such parameters might then be derived and utilized in making these decisions. The first purpose of this paper is to rigorously investigate whether it is correct to make decisions in this manner; in general, it is not. The second purpose is to investigate the decis'ion bias in decisions based on commonly employed parameter estimates. We will determine, for example, whether a price setting monopolist is mistakenly setting prices too high or too low when he bases his pricing decision on the maximum likelihood estimate of his demand equation. Finally, we provide a detailed numerical example to show that basing decisions on conventional parameter estimates can lead to large losses of utility. In Section 2, we introduce all notation, explain the procedure commonly used when basing decisions on values of unknown underlying parameters, and exhibit the decision-theoretic correct alternative procedure. When the optimal decisions under these two procedures are identical, we call the proper. We use the term summary value to refer not only to standard parameter estimates but to any single substituted for an unknown parameter in order to make decisions. This generalized concept is necessary because a that is appropriate for making decisions, in a sense defined below, need not have any of the properties of conventional parameter estimators. In Section 3, we derive under general assumptions necessary and sufficient conditions for the existence of proper values that are independent of the decision maker's utility function, U( ). This independence restriction is

Abstract In the April 1975 issue of "The Accounting Review," an article reported the results of an empirical study in there was an attempt to, assess the relative effect which the successful efforts (SE) vs. full cost (FC) method of accounting for exploration costs has on various accounting variables of firms in the extractive petroleum industry and compare the market response to the different accounting numbers generated under these alternative accounting procedures. The objectives of the present paper are to point out certain conceptual ambiguities and logical inconsistencies in the article's analysis, identify several important factors which the article failed to consider in its research design and demonstrate by way of additional research how these factors may have affected the results. In summary, it is believed that empirical evidence with respect to the price effects of the FC vs. SE choice is extremely important and timely given that both the SEC and the FASB currently are considering the subject of accounting in the extractive industries.